My workflow in situations like this:
Do all keing and fx at footage native resolution (1920x1080 in your case) and resize in the Output. If the aspect ratio of the frame is different in the final requirements I may use Crop in the Output or just create a comp with the required final size, bring my initial comp in and scale to fit in (maybe re-positioning if there's a need). With this method there's no need to re-size in the Output settings.
Thanks! Just for clarification... You mention 2 different ways - the 1st similar to my point 2, however using the native resolution and then resizing/cropping in output. The 2nd is similar to my point 1, where I create a comp of the correct settings and scale to fit.
Can any of these options lead to a reduced quality in output? Thanks again.
Both will give you the best quality for the final result. The only way to loose quality is if you resized your footage, render it, then do the keying/fx and then render again at small resolution. As long as you do all your work at the best possible resolution before scaling down, you get the best possible result.